A typical Irish production company is established to make one film only. It is commissioned to produce a film for an agreed fee, payable on delivery and acceptance, with a further entitlement to either a net profit or adjusted gross position. For example a pre-sale fee of about 82% of the investor funds raised together with an advance of the remainder of the budget is not unusual. The structure can also provide a cash-flow benefit to the producer.
Example: A film is to be made at a budget of €4m. Section 481 funds of 66% may be raised (i.e. €2.64m). A pre-sale agreement may be put in place with a distributor/broadcaster for 82% of the Section 481 funds raised. This amount is payable on delivery and acceptance of the film. The distributor/broadcaster will fund the non-Section 481 element of the budget (i.e. €1.36m).
Production
Budget: €4m |
|
Non-Section
481 advance |
€1.36m
|
Section
481 Investor Finance
(66% of production budget) |
€2.64m
|
|
€4.0m
|
|
|
Producers
Benefit: |
|
Production
Budget: €4m |
|
Non-Section
481 advance |
€1.36m
|
Delivery
fee (82% of S481 Investor Finance) |
€2.16m
|
|
€3.52m
|
Producers
Benefit (12% of Budget) |
€
.48m |
|
€4.0m
|